James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — Non-Deal Roadshow (October 2006)
44 slides from James Hardie Industries's roadshow presentation, Oct 3, 2006
Slide 1: Building On Proven Performance - US Roadshow September 2006
Building On Proven Performance US Roadshow - September 2006 In this Management Presentation, James Hardie may present the financial measures, sales volume terms, financial ratios, and Non-US GAAP financial measures included in the Definitions section of this document starting on page 42. The company
Slide 2: A Growth Focussed Company
James Hardie Annual net sales US$1,488m Total assets US$1,445m Operations in North America, Asia Pacific and Europe 3,300 employees Market cap US$2.5 billion ASX S&P 100 company Note: Net sales and total assets are at 31 March 2006. Total assets at 30 June 2006 were US$1,352. A Growth Focussed Compa
Slide 3: Investment Attributes
Focussed on Fibre Cement High growth Sustainable competitive advantage Unique proprietary technology Strong financial performance, cash flows and balance sheet1 Track record of outperforming US housing market Investment Attributes Investment Attributes 1 Excluding asbestos provision
Slide 4: First to Develop Fibre Cement
First to Develop Fibre Cement James Hardie pioneered development of fibre cement technology in the 1980s James Hardie pioneered development of fibre cement technology in the 1980s Superior Durability Fire Resistant High Impact Resistant Moisture Resistant Termite Proof
Slide 5: Business Overview
(@)sames Hardie Business Overview
Slide 6: Many Product Applications
Many Product Applications External siding/soffit lining Trim and fascia Internal wall/floor wet area lining Ceiling lining and flooring External/internal wall systems Commercial facades Drainage pipes
Slide 7: Unique Technology and Scale
Unique Technology and Scale Sustainable Competitive Advantage Unique plant engineering and proprietary process technology and product formulations - significant investment in R&D Superior capital cost efficiency Low cost manufacturer Only national producer of fibre cement in each key market Excellen
Slide 8: Focus Industry Leadership and Profitable Growth
Focus Industry Leadership and Profitable Growth Aggressively grow the market Secure differentiated position Generate strong top line growth Win high shares of large segments Sustain attractive margins
Slide 9: Operations Overview
(@)sames Hardie Operations Overview
Slide 10: Business Portfolio FY2006
Business Portfolio FY 20061 Total Identifiable Assets*,# Sales EBIT2,# USA Fibre Cement Established high growth/high return 79% 82% 95% Asia Pacific Fibre Cement Established high return 16% 16% 12% Other Potential growth opportunities (Pipes, Europe) 5% 2% (7%)2 1 At and for the fiscal year ended 31
Slide 11: Largest Fibre Cement Producer in North America
Largest Fibre Cement Producer in North America Flat Sheet Plants Flat Sheet Plants Capacity (mmsf) Fontana, California Fontana, California 180 Plant City, Florida Plant City, Florida 300 Cleburne, Texas Cleburne, Texas 500 Tacoma, Washington Tacoma, Washington 200 Peru, Illinois Peru, Illinois 560 W
Slide 12: Low Cost Fibre Cement Producer
Low Cost Fibre Cement Producer mmsf 1990 1994 1998 2001 2005 60 100 150 200 300 Production Capacity Per Line 1990 1995 1997 1998 2000 2004 US$/sf Capital Cost/Unit of Capacity 2005 USA Fibre Cement
Slide 13: Superior Product Performance vs Engineered Wood
Superior Product Performance Fibre Cement is more durable than wood and engineered wood Fibre Cement Superior Durability Moisture Resistant Fire Resistant Weather Resistant Termite Proof Resists Warping Resists Cracking Resists Rotting Holds Paint Longer ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Engineered Wo
Slide 14: Superior Product Performance vs Vinyl
Superior Product Performance Fibre Cement looks and performs better than vinyl Vinyl Fire Resistant Hail Resistant Resists Warping Resists Buckling Colour Lasts Longer Dimensional Stability Can Be Repainted ? ? ? ? ? ? ? ? ? ? ? ? ? ? Fibre Cement USA Fibre Cement
Slide 15: Exterior Products - Siding
Exterior Products - Siding Continuing to increase share of siding sales estimated terminal share 35% Bsf = billions square feet NAHB Sources: Builder Practices Report - Siding Usage/Exterior Wall Finish In New Construction Consumer Practices Report - Siding Usage/Exterior Wall Finish In Repair & Rem
Slide 16: Exterior Products Divisions
VT Emerging Markets Established Markets Exterior Products Divisions
Slide 17: Exterior Products Established Markets
Exterior Products Established Markets Accounts for 75% of USA Fibre Cement sales High builder penetration High brand awareness Aggressive growth of demand for fibre cement products Further penetration against wood-based technologies Opportunities against brick and stucco Expansion into rural markets
Slide 18: Exterior Products Emerging Markets
Exterior Products Emerging Markets Approx. 50% of new housing sales Accounts for 25% of USA Fibre Cement sales Penetrating regions where vinyl is dominant siding material Focus on majority colour penetration Estimated terminal share of 30% Internal target of 30% - 50% revenue growth p.a.1 1 Assumes
Slide 19: Exterior Products ColorPlus Model
Exterior Products ColorPlus(r) Model Higher quality products with higher revenue stream Strategy designed to reduce 'on the wall' cost and close gap with vinyl siding Supply of pre painted exterior products Reduce supply chain costs Installer education Channel increases revenue base and gains increm
Slide 20: Average Net Sales Price
Average Net Sales Price Average price growth driven by mix and price increases 360 380 400 420 440 460 480 500 520 540 560 580 600 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Q1 FY07 US $ / mmsf
Slide 21: USA Fibre Cement Top-Line Growth
USA Fibre Cement Top-Line Growth Top-Line Growth 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 Volume (mmsf) / Starts (000s Units) $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 Revenue (US$M)
Slide 22: USA Fibre Cement EBIT and EBIT Margin
USA Fibre Cement *Excludes restructuring and other operating expenses of US$12.6 million in Q3 FY02 Note: dotted lines indicate EBIT margin long-term target range of 20% - 25% EBIT and EBIT Margin* 0 20 40 60 80 100 120 FY01 FY02 FY03 FY04 FY05 FY06 Q1 FY07 EBIT US$M 0 5 10 15 20 25 30 35 EBIT MARGI
Slide 23: Growth In Revenue Per Employee
Growth In Revenue Per Employee $552 $495 $48 $115 $153 $166 $251 $250 $329 $298 $354 $326 $381 $367 $413 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Revenue # of Employees Revenue Per Employee
Slide 24: US New Housing Market - Slowing
US New Housing Market - Slowing Key sales determinants Level of new housing construction activity Level of repair and remodelling activity Market development program effectiveness Price improvement New housing 70% of sales (repair and remodel 30%) Internal sales target of 15% - 25% p.a. growth (assu
Slide 25: Backer is Growing Fast
Backer is Growing Fast Net sales growing strongly - CAGR* 26% (FY02-FY06) Leading position in 1/4" segment - technology advantage for floor applications Hardibacker 500(r) is driving penetration on wall applications Greenboard replacement Growing segment High terminal segment share * Compound Annual
Slide 26: Asia Pacific Fibre Cement
Asia Pacific Fibre Cement Australia, New Zealand, Philippines FY06 net sales US$242m FY06 EBIT US$42m Higher value differentiated products Lower delivered cost Shift to growth model Philippines focus on profitability
Slide 27: Pipes and Europe, Other Fibre Cement
Pipes USA manufacturing plant commissioned 2001 Advantages over reinforced steel concrete pipes in mid-diameters - light, long, strong Lower cost to make and install Manufacturing targets not met but progress being made Europe Market Development Focussed on UK and France Differentiated products impo
Slide 28: Q1 FY07 Results
James Hardie Ma Q1 FY07 Results
Slide 29: Results - Q1 FY07
Results - Q1 FY07 US$Million Net Sales 415.5 Up 16% Gross Profit 157.7 Up 9% EBIT* 96.1 Up 11% Operating Profit* 62.7 Up 12% * Excludes effect of foreign exchange on asbestos provision.
Slide 30: Results - Q1 FY07 USA Fibre Cement
Results - Q1 FY07 US$Million Net Sales 348.9 Up 21% EBIT 103.3 Up 10% Volume 605.7 mmsf Up 16% EBIT Margin 29.6% Down 3.1pts USA Fibre Cement
Slide 31: Results - Q1 FY07 Other Businesses
Results - Q1 FY07 Other Businesses ANZ volumes slightly up, EBIT margin 16.7% Philippines sales up 2%, EBIT positive USA Hardie Pipe - first EBIT positive quarter Europe - EBIT negative, as expected
Slide 32: Key Ratios
Key Ratios Q1FY07 FY06 FY05 EPS (Diluted)1 13.4c 44.9c 27.7c Dividend paid per share - 10.0c 3.0c Return on Shareholders' Funds1, 2 29.3% 29.6% 22.4% Return on Capital Employed1, 2 38.2% 28.9% 23.6% EBIT/ Sales (EBIT margin)1 23.1% 18.9% 16.2% Net Interest Expense Cover1 46.4x - 38.5x Net Interest P
Slide 33: High Growth and Attractive Returns Targeted
High Growth and Attractive Returns Targeted Long Term Financial Targets Target1 Actual FY06 Actual FY05 Actual FY04 Revenue Growth > 15% p.a. 23% 23% 25% EBIT Margin > 15% p.a 19%* 16% 18% Return On Capital Employed > 15% p.a 29%* 24% 23% 1 Long term target excludes asbestos-related expenses * Exclu
Slide 34: Long-term Asbestos Compensation Funding Arrangement Progress
Long-term Asbestos Compensation Funding Arrangement Progress
Slide 35: Long-Term Funding Proposal - Background
Long-Term Funding Proposal - Asbestos Related Personal Injury Claims Background Established Medical Research and Compensation Foundation (MRCF) in February 2001 with assets of A$293m - MRCF receives claims against two former subsidiary companies MRCF announced in October 2003 that funding likely to
Slide 36: Long-Term Funding Proposal - Agreements
Long-Term Funding Proposal - Asbestos Related Personal Injury Claims Non-binding agreement signed with NSW Government, union and claimants' representatives - December 2004 Funding arrangement intended to allow James Hardie to remain profitable, financially strong and to fund growth Final funding agr
Slide 37: Long-Term Funding Proposal - Key Elements
Long-Term Funding Proposal - Asbestos Related Personal Injury Claims Key Elements Special Purpose Fund (SPF) to be established - James Hardie to appoint majority of Board Initial funding based on KPMG Actuaries updated report - discounted central estimate A$1.5bn at 31 March 2006 Annual contribution
Slide 38: Asbestos Funding Update
Update Net provision of US$716m (A$1 billion) recorded at 31 March 2006 - "probable and estimable" under US GAAP Net provision adjusted to US$742m (A$1 billion) at 30 June 2006 due to FX (US$27m charge to P&L) June 2006, Australian Taxation Office (ATO) declined to endorse SPF as tax concession char
Slide 39: Voluntary Asbestos Compensation Funding Proposal Comparison
Voluntary Asbestos Compensation Funding Proposal Comparison Comparison A$ billions 30 Jun 04 31 Mar 05 30 Jun 05 31 Mar 06 Central Estimate - Discounted 1.536 1.685 1.5681 1.5171 Central Estimate - Undiscounted 3.586 3.604 3.1311 3.0791 Range - Undiscounted 2.0 - 5.7 2.0 - 5.9 1.5 - 5.51 1.7 - 5.31
Slide 40: Summary
Summary We have a strong, well established, high growth and high return business We have sustainable competitive advantage Our model for continued strong growth is based on: Large market opportunity Superior value proposition Proprietary and/or protected technology Large upsides due to current R&D i
Slide 41: Endnotes - Definitions
Endnotes DEFINITIONS Financial Measures - US GAAP equivalents EBIT and EBIT margin - EBIT is equivalent to the US GAAP measure of operating income. EBIT margin is defined as EBIT as a percentage of net sales. James Hardie believes EBIT and EBIT margin to be relevant and useful information as these a
Slide 42: Diluted earnings per share excluding asbestos
Diluted earnings per share excluding asbestos - Diluted earnings per share excluding asbestos is not a measure of financial performance under US GAAP and should not be considered to be more meaningful than Diluted earnings per share. The company has included this financial measure to provide investo
Slide 43: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES EBIT and EBIT margin excluding asbestos - EBIT and EBIT margin excluding asbestos are not measures of financial performance under US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. James Hardie has included these financial measures to
Slide 44: Disclaimer
Disclaimer This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the United States Securities and Exchange Commission on Forms 20-F and 6-K, in the annual reports to shar
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